During 2014 Saskatchewan Enterprises Ltd a private entity

incurred 4 7 #2194
During 2014, Saskatchewan Enterprises Ltd., a private entity, incurred $4.7 million in costs to
develop a new software product called Dover. Of this amount, $1.8 million was spent before
establishing that the product was technologically and financially feasible. Dover was completed
by December 31, 2014, and will he marketed to third parties. Saskatchewan expects a useful
life of eight years for this product, with total revenues of $12 million. During 2015,
Saskatchewan realized revenues of $2.7 million from sales of Dover.Instructions(a) Assuming
Saskatchewan reports under ASPE, prepare the journal entries that are required in 2014 to
record the above.(b) Prepare the entry to record amortization at December 31, 2015.(c) At what
amount should the software costs be reported in the December 31, 2015 balance sheet?(d)
Could the net realizable value of this asset at December 31, 2015, affect your answer? Explain
how limited-life assets are tested for impairment.(e) How would your response to (d) change if
Saskatchewan Enterprises Ltd. was a public company?View Solution:
During 2014 Saskatchewan Enterprises Ltd a private entity incurred 4 7

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